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The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy

Author

Listed:
  • Michael Pettis

    (Peking University
    The Carnegie Endowment)

Abstract

China's economic growth is sputtering, the Euro is under threat, and the United States is combating serious trade disadvantages. Another Great Depression? Not quite. Noted economist and China expert Michael Pettis argues instead that we are undergoing a critical rebalancing of the world economies. Debunking popular misconceptions, Pettis shows that severe trade imbalances spurred on the recent financial crisis and were the result of unfortunate policies that distorted the savings and consumption patterns of certain nations. Pettis examines the reasons behind these destabilizing policies, and he predicts severe economic dislocations--a lost decade for China, the breaking of the Euro, and a receding of the U.S. dollar--that will have long-lasting effects. Pettis explains how China has maintained massive--but unsustainable--investment growth by artificially lowering the cost of capital. He discusses how Germany is endangering the Euro by favoring its own development at the expense of its neighbors. And he looks at how the U.S. dollar's role as the world's reserve currency burdens America's economy. Although various imbalances may seem unrelated, Pettis shows that all of them--including the U.S. consumption binge, surging debt in Europe, China's investment orgy, Japan's long stagnation, and the commodity boom in Latin America--are closely tied together, and that it will be impossible to resolve any issue without forcing a resolution for all. Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future.

Suggested Citation

  • Michael Pettis, 2013. "The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy," Economics Books, Princeton University Press, edition 1, number 9936.
  • Handle: RePEc:pup:pbooks:9936
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    Citations

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    Cited by:

    1. repec:rnp:ecopol:ep1761 is not listed on IDEAS
    2. Herman Mark Schwartz, 2016. "Banking on the FED: QE1-2-3 and the Rebalancing of the Global Economy," New Political Economy, Taylor & Francis Journals, vol. 21(1), pages 26-48, February.
    3. Jan Behringer & Till van Treeck, 2013. "Income distribution and current account: A sectoral perspective," IMK Working Paper 125-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Alecia Waite Cassidy & Edward Tower & Xiaolu Wang, 2015. "Manufacturing Fetishism: The Neo-Mercantilist Preoccupation with Protecting Manufacturing," World Scientific Book Chapters,in: THE REGION AND TRADE New Analytical Directions, chapter 6, pages 137-175 World Scientific Publishing Co. Pte. Ltd..
    5. Edward Tower & Yifan Victor Ye, 2016. "How Taxes And Real Wage Inflexibility Interact To Make Trade Deficits Addictive: The Tertiary And Quaternary Burdens Of A Transfer," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(02), pages 1-15, June.
    6. Helen Thompson, 2015. "Germany and the Euro-Zone Crisis: The European Reformation of the German Banking Crisis and the Future of the Euro," New Political Economy, Taylor & Francis Journals, vol. 20(6), pages 851-870, December.
    7. José Antonio Ocampo, 2016. "Global macroeconomic cooperation and the exchange rate system," WIDER Working Paper Series 049, World Institute for Development Economic Research (UNU-WIDER).
    8. repec:wsi:serxxx:v:62:y:2017:i:05:n:s0217590815501003 is not listed on IDEAS
    9. repec:taf:bushst:v:58:y:2016:i:3:p:364-377 is not listed on IDEAS
    10. repec:spr:manint:v:58:y:2018:i:2:d:10.1007_s11575-017-0320-4 is not listed on IDEAS
    11. Jan Behringer & Till van Treeck, 2015. "Income distribution and the current account: a sectoral perspective," Working Papers 379, ECINEQ, Society for the Study of Economic Inequality.
    12. Andersen, Thomas Barnebeck & Barslund, Mikkel & Hansen, Casper Worm & Harr, Thomas & Jensen, Peter Sandholt, 2014. "How much did China's WTO accession increase economic growth in resource-rich countries?," China Economic Review, Elsevier, vol. 30(C), pages 16-26.
    13. repec:liu:liucej:v:14:y:2017:i:1:p:13-36 is not listed on IDEAS
    14. repec:liu:liucej:v:14:y:2017:i:1:p:13-37 is not listed on IDEAS

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